Do You Feel About Your Trading?
The other day a friend told me she
was having trouble signing a contract because she didn’t feel good
about it. Her comments
reminded me of how I felt about my trade entries that morning for
one of my systems. I was
still pulling the trigger but wasn’t feeling totally good about
it. The system was
performing well, but I’ve started to wonder if these
unfamiliar market conditions might affect that system, and I’ve
recognized some feelings of slight doubt at the entries.
Van stresses the critical importance
of feelings, emotions, and mental states for traders.
Those aren’t topics to which I paid much attention
previously, especially relating to making money in the markets.
By deepening my understanding of this area and following a
simple process, my trading has seen a dramatic improvement.
Do You Feel?
How do you feel right now?
Moreover, how adept are you at identifying and describing how
you feel? Good, fine, or
OK? Those were the core
of my emotional vocabulary before doing the Peak Performance Home
Study Course and other psychological courses since.
Because we define reality through language, limited
vocabulary can effectively limit options, a less than desirable
condition when you have the ability to choose.
Quick test: write down as many descriptive
emotional words as you can in one minute. How many emotions
could you list? I
thought I did pretty well coming up with 13 emotions by the one
minute point—about the same time I was running out of words.
Then, I turned the page in the book where I found
this exercise to see over 300 words listed, and these were just
positive emotions! I
felt quite humbled (which, by the way, wasn’t one of my 13 words).
Admittedly, I wasn’t
highly conscious of my feelings or able to describe them very well.
To help traders with the common
condition of being unconsciousness of their feelings, Van uses a bag
of marbles to create a trading simulation game.
It’s partly an emotional laboratory in his workshops.
As the marbles get pulled, the teams respond and the drama
ensues. He’s constantly prodding the players to “Notice your
feelings.” It’s been
enlightening to record how emotionally I can react in a simple game
involving small amounts of money.
Also watching my teammate’s wild-eyed excitement,
frustrated aggravation, or occasional blank-faced despondence has
been educational. Funny,
I’ve felt each of those too the way I used to trade.
That’s the whole point of the game
though—to generate emotions, to push your buttons in a
controlled environment where you can notice what’s going on
inside. In playing the
game multiple times, I’ve experienced a wide range of emotions.
It reminds me of the way I felt when I was trading several
marble game is a powerful experience; ask anyone who’s played.
From it, I’ve learned that clear objectives and preparing a
thorough plan can make the game plain fun.
On teams where we have taken these steps, I’ve felt calm,
attentive and joyful.
Emotionally Driven Process
My emotions used to be driven by what
the market was doing. Volatility
was good and smooth periods were bad (it meant waiting patiently or
impatiently). By trying
to call market turning points, I would be elated when I caught them
or upset when I missed them. On
top of that, my position sizing strategies (or lack thereof)
provided another whole level of emotional reactions that compounded
my responses to catching or missing the market turns.
Gains engendered larger positions while losses produced
seemingly more turning points to trade in my effort to make up some
of the losses. For quite
awhile, I actually thought this was working; I was only losing
“some” money overall. When I was about halfway through the Peak Performance course, I
started to recognize what was going on. I had been very
lucky not to have blown up my entire account.
I was doing nearly nothing like what
Van laid out in the Top Tasks of Trading, which were a host of new
concepts. More important
for me were some simple fundamentals for successful trading that I
1. Having a clear process.
2. Defining an effective
emotional state for each part of the process.
3. Being able to get
into those mental states to trade.
Wow, this was the most non-technical and radical trading
advice I had read since I had decided to “get serious” about
trading a few years back.
The Top Tasks of Trading provided a simple and effective structure to
deal with a range of trading issues, including the emotional results
of my trading. Rather
than my variable trading results causing variable emotions, the
Tasks could help me generate certain emotions in order to create
stable trading results. Furthermore,
the Tasks are simple steps that make it easy to identify and
address individual trading issues that come up—like my entries
Ken Long explains that he likes to
feel professional when he trades.
That’s an appealing idea for me, and I’ve adopted that as
a mental state when I play the marble game as well as when I trade.
The whole idea of picking how I would like to feel when trading
was a new idea for me.
To help improve my feelings about my
recent entries, last weekend I checked a few things.
Systems results—positive. Big picture—unchanged. The
Top Tasks—a very fruitful review.
Several tasks will play a supporting role with my entries
this week including a review of my trading system, my ongoing
self-analysis, and knowing I have an upcoming periodic review.
One particular task, however, is where getting into a
particular mental state will help me a great deal.
It’s the action step where all of the “work” for a
trade has been done already and the task is just to enter the
position. I now remember
to feel good when I have a valid setup and to enter the trade
without thinking. The
mental state for this step is to be totally committed to the entry.
Remembering that little bit will help a lot this week.
I mention that if it’s possible to pick a particular mental state
to get in to for trading, that it just might be a useful skill for life
in general? It’s funny
that working on a “trading skill” also has made my life better.
I like to feel great. “Feel
great” is simply a mental state that I can create now pretty
easily instead of waiting for certain things to happen.
Now, do I do that all the time?
Well, no, but that’s called self-sabotage and a whole
enchilada for another day.
do you want to feel in your trading? How
about a broader question: how do you want to feel in your life?
Wayne Dyer said the plain statement “I want to feel good”
can have a profound impact on your thinking.
Trade well and take care.
R.J. Hixson: R.J. Hixson is a devoted husband and active father. He started trading again recently after completing Van Tharp’s
Super Trader program and made a full recovery from his previous trading habits. In his spare time, he markets a product line for a global technology company.